Wealth Management

Mozambique wants Credit Suisse, Privinvest to help pay its bonds

Credit Suisse/Bloomberg

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The government’s request comes as the country enters the final stages of a three-year process to reorganise its debt amid allegations by the US Department of Justice that a series of maritime projects the loans funded were used to pay bribes.

Tuesday 03, September 2019

Mozambique wants a UK court to order Swiss lender Credit Suisse Group, shipbuilder Privinvest and others to share responsibility for repaying a $727 million eurobond the government is restructuring, reported Bloomberg.

The Southern African country wants approval from investors to switch the eurobonds due in 2023 into $900 million of notes maturing from 2028 to 2031 and the government told investors that it seeks indemnity against any liabilities arising from the existing bonds, the costs of servicing the debt and expenses related to the new issuance.

In the memorandum sent to bondholders, the government is claiming indemnification and contribution for any liability it may have to the holders of the existing notes and full cost of debt service and associated costs relating to the new bonds to be issued in the current debt-restructuring process.

Additionally, the natural gas-rich nation asked the court nullify a government guarantee on a related $622 million loan arranged by Credit Suisse for state-owned ProIndicus. It’s also assessing whether it has any rights or obligations regarding a $535-million loan to Mozambique Asset Management in light of criminal proceedings locally and in the US related to the three debts.

Mozambique’s case is that the government was deceived into restructuring $850 million of so-called loan-participation notes in 2016 into the existing eurobonds.

Questions have lingered as to whether Mozambique should pay the $2 billion of debts racked up through deals done during 2013 and 2014, the bulk of which were concealed from donors.

In a December indictment, the US Department of Justice alleged the maritime projects were nothing but a front to pay at least $200 million in bribes and kickbacks to corporate executives, bankers and government officials. Two former Credit Suisse managers involved in arranging the loans have already pleaded guilty in the case.

After one of the managers, Andrew Pearse, accused Privinvest CEO Iskandar Safa of being aware of bribery in the deals, Mozambique started separate civil proceedings against him in the UK High Court. Safa said Pearse’s allegations are unfounded and came after months of pressure from US prosecutors, reducing their credibility.

TAGS : Credit Suisse Group, Privinvest , US Department of Justice, Mozambique

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